Electronic Signatures-Esign Origins, Understanding Laws, and the Affects

On June 30, 2000 President Clinton signed the "Electronic Signatures in Global and National Commerce Act" (ESIGN) using his electronic signature ID, and thereby established the validity of electronic signatures for interstate and international commerce.

In the fours year prior to this Act's passage a dozen states had passed similar laws and guidance for state specific business purposes, and in the five years since Professional audio and video Act's passing every other state has passed similar laws and legislation. What does it all mean, and in the end how can it benefit businesses, individuals and the nation or world as a whole?

The best way to answer a question like this is to take a look at the origins of the law, and understand the reasoning behind its passage and the passage of the state specific laws.

The Birth of the Electronic Signature - Faxing

In the 1980's companies and even some progressive individuals began using fax machines for high priority or time sensitive delivery of paper based documents. Today, the fax machine is a staple of the business world. Most people do not even consider the original hurdles this new medium created, nor do they consider its impact on the speed of communication and the advantages of its use. However in its infancy many of the same issues surrounding electronic communications and electronic signatures had to be resolved when utilizing the facsimile.

When the first contract was signed and faxed it created the basis for the discussion of electronic signature validity. After all it was the first time someone could sign something, place it in a machine, send it from one phone line to another and deliver a digitally reproduced signature. The path this signature took was not controllable or traceable, and in most cases it traversed miles of wire before reaching its destination, so how could it be considered a valid signature? The intentions of the signature were clear to everyone, but businesses wanted to know they could count on the validity of the signature, and if no one actually witnessed the action of one individual or of a corporation how could a business put any faith in it? This of course caused quite a stir and in rapid fashion the courts ruled this signature carried the same validity as if the parties were standing in the room together. With this, the fax became standard operating procedure world-wide.